XML 40 R12.htm IDEA: XBRL DOCUMENT v3.22.4
DEBT
 12 Months Ended
Sep. 30, 2022
DEBT  
DEBT

NOTE 6 – DEBT

Short-term debt comprises a significant component of the Company’s funding needs. Short-term debt is defined as debt with principal maturities of one-year or less. Long-term debt is defined as principal maturities of greater than one year.

Short and Long-Term Debt

The following is a summary of our indebtedness at September 30, 2022:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net Carrying Value

​

​

​

​

​

​

​

​

​

​

​

​

Unpaid Principal 

​

​

​

​

​

​

​

Contractual

​

Contractual 

Type of Debt

    

Balance

    

Current

    

Long-Term

    

 Interest Rate

    

Maturity

Matured Notes

​

$

3,051,085

​

$

3,051,085

​

$

—

 

0.00 - 10.00

%  

2019-2021

Promissory Notes

​

 

1,096,787

​

 

—

​

 

1,096,787

 

28.00

%  

2024

Real Estate Note

​

 

5,247,612

​

 

247,612

​

 

5,000,000

 

5.0 - 8.99

%  

2023 - 2024

Loan Advances

​

 

557,800

​

 

557,800

​

 

—

 

0.00 - 10.00

%  

2016 - 2018

Less: Debt Discount

​

 

(932,235)

​

 

—

​

 

(932,235)

 

NA

 

NA

Total Debt

​

$

9,021,049

​

$

3,856,497

​

$

5,164,552

 

NA

 

NA

​

Scheduled Debt Maturities

The following scheduled debt maturities at September 30, 2022:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

 

Years Ended September 30, 

​

    

2023

    

2024

    

2025

    

2026

Total

Total Debt

​

$

3,856,497

​

$

5,164,552

​

$

—

​

$

—

$

9,021,049

​

​

​

Notes and Advances

We enter into promissory notes with third parties and Company officers to support our operations. Promissory notes typically are for less than three years maturity and carry interest rates from 0% to 28.0%. Promissory notes and loan advances that are in default still accrue interest after their scheduled maturity dates. We record imputed interest on promissory notes and advances which are deemed to be below the market interest rate. For the years ended September 30, 2022, and 2021, we recorded interest expenses of $30,199,081 and $21,168,232, respectively.

In some instances, shares of common stock or warrants were issued along with the issuance of promissory notes, resulting in the recognition of a debt discount which is amortized to interest expense over the term of the promissory note. Debt discount amortization for the fiscal year ended September 30, 2022, and 2021, was $19,032,382 and $8,026,328, respectively.

Prior SPAs and Related Warrants

​

The 15% unsecured convertible notes (the “15% Notes”) described within the Exchange Agreement dated May 7, 2021 were issued pursuant to certain Securities Purchase Agreements (the “Prior SPAs”) with the various noteholders in 2020 and 2021 generally to finance Mullen Technologies’ electric vehicle business. The Prior SPAs provided for the issuance of 15% Notes and a specified number of warrants allowing the noteholders to purchase common stock at an exercise price of $0.6877 per share, at any time prior to an expiration date that is generally 5 years after the date of issuance.

​

At the effective time of the Merger, each of the warrants to purchase Mullen Technologies common stock were canceled and converted automatically into warrants to purchase shares of common stock of the Company (the “Prior SPA Warrants”).  See Note 8 - Deficiency in Stockholders’ Equity - Amendments to Warrants and Anti-Dilution Waivers.

Amended and Restated Secured Convertible Note and Security Agreement

 

On June 17, 2022, the Company entered into an Amended and Restated Secured Convertible Note and Security Agreement (the “A&R Note”) with Esousa Holdings LLC, (“Esousa”). The A&R Note amended and restated a promissory note dated July 23, 2020, entered into between Mullen Technologies, Inc. and DBI Lease Buyback Servicing LLC (“DBI”), for a principal amount of $23,831,554 (the “Original Note”). Esousa purchased rights under the Original Note from DBI immediately prior to entering into the A&R Note.

 

The A&R Note extended the maturity date of the Original Note, to July 23, 2024. In addition, the A&R Note provides that Esousa may elect to convert all or any portion of the then-outstanding principal balance of the A&R Note into that number of shares of the common stock of the Company, equal to the number obtained by dividing the outstanding principal balance of the A&R Note to be so converted at a 5% discount to the lowest daily volume-weighted average price in the 10 trading days prior to conversion based on the prevailing market value of shares of the common stock of the Company as reported on Nasdaq at close on the date on which a written notice of conversion is delivered to the Company.  On June 27, 2022, Esousa exercised their right to convert the principal amount of $27,770,400 into 28,000,000 shares of common stock. The Company issued 17,500,000 shares as partial conversion and recorded a liability at fair value in the amount of $13,755,000 classified as shares to be issued. As of September 30, 2022, the balance of the A&R Note was $1,096,787 in principal plus accrued interest of $300,907. The liability to issue shares was remeasured to fair value until the Company had sufficient outstanding shares and is presented within Liability to issue shares in the balance sheet in amount of $10,710.000 (See also Note 20 – Subsequent Events).